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Nuclear power industry – an uncertain future in Brazil, Russia, India and China

China is looking much less committed to nuclear power than it was a year ago.

The reality is that China needs nuclear power much less than the nuclear industry needs China. 

Prospects for Nuclear Power in 2012  Source: Platts - a leading global provider of energy, metals and petrochemicals information. London, 30 January 2012 “….BRICs   [Brazil, Russia, India and China] + South Korea China has dominated new nuclear plant orders in the past few years, accounting for 25 out of the 38 reactors on which construction started worldwide between 2008-2010. Six of these units were for Gen III+ designs, four AP1000s and two EPRs. Almost all the others used a design imported from France in the 1980s, which in turn had been licensed from Westinghouse in the early 1970s. This design, the CPR1000, is showing its age and there was an expectation, even before Fukushima, that the AP1000 would replace it. This would have been a huge boost to the AP1000, giving it the volume of orders that might have allowed costs to come down and for teething problems to be solved. The EPR, by contrast, appears to have no prospect of further orders in China.

However, there were signs that the strain of the rapid pace of construction was beginning to show. In 2011, no new starts were made, compared with ten in 2010. Fukusima explains this to a degree, but some might have been expected in the first three months of 2011 before disaster struck. The reason behind the slowdown is the high cost of the AP1000. The large Chinese utilities appear to be looking at other options.

There is now talk of pursuing indigenous advanced designs developed from the CPR1000 as well as Small Modular Reactors. China has always been adept at convincing nuclear suppliers that there was a great future for their particular technology in China.
It is unclear whether talk of SMRs and new advanced designs will go any further. China is looking much less committed to nuclear power than it was a year ago.

There is also speculation that China may enter the export market on the entirely unsupported assumptions that its reactors will be cheap and that it can successfully build them away from home soil. South Africa is particularly enthusiastic about Chinese designs, but whether this enthusiasm can be turned into orders remains to be seen.

The reality is that China needs nuclear power much less than the nuclear industry needs China. For its part, Russia did not order any reactors for its home market for more than two decades after Chernobyl. Six plants, started before Chernobyl, remained under construction for well into the 21st century. All except one (the only one using the Chernobyl design) are now finally on-line. The last was commissioned in 2011 after 25 years under construction.

In 2008, Russia began ordering again with a new design, which it claimed was Gen III+. In 2008-10, the government started construction on two reactors per year. It also reported export orders to Turkey, Vietnam, India and Bulgaria, although serious work has not started on any of these projects as yet. It also brought on line the reactor in Iran started in 1975, a curious mixture that appears to be a Russian reactor inside a Siemens containment.

Whether the new Russian design would satisfy Western regulators is not known, but the Russian vendor, Rosatom, does seem willing to do deals no other vendor would, and not just in Iran. For Turkey, it is contracted to build and operate four reactors, selling much of the power in a fixed price range, reported to be about €100-120/MWh ($126.87-152.32/MWh).

For India, it has nearly completed two reactors at Kudankulam and is reported to have agreed to supply ten more, despite Indian law allowing some limited liability for vendors in the case of an accident, a liability that is proscribed by international treaty elsewhere. The question marks against Russia are whether it can penetrate the larger developed country markets, whether it can continue to offer the sort of deals it has recently signed up to, and whether the technology would stand up to Western regulatory scrutiny.

India, meanwhile, has always been a country where there would be a huge nuclear market tomorrow. In part, orders have not materialised because of the proliferation issues raised by the country’s 1975 nuclear weapons test and New Delhi’s refusal to sign the Nuclear Non-proliferation Treaty. However, there are also problems of finance and the country’s record on construction time and cost. India’s nuclear plants probably have the worst reliability record of any nation in the world. Nearly all the country’s existing plants are based on the Canadian CANDU design imported before India’s nuclear test explosion in 1975.

The deal in 2007 to get round NPT restrictions has opened the way for a flood of reported orders with Areva (EPRs), Toshiba/Westinghouse (AP1000s) and GE-Hitachi (ABWRs). Each has claimed orders for six reactors on top of the ten reactors ordered from Rosatom. India also plans to build six more of its CANDU design. However, none of these deals looks secure and problems of vendor liability as well as finance – vendors are asking for very strong support from sovereign loan guarantees – may mean few will actually go ahead.

South Korea has established a good reputation for building nuclear plants to cost and time, as well as operating them reliably. However, it was not until 2009 that it entered the international market, selling four reactors to the UAE, undercutting bids by Areva and Toshiba by more than 20%. This caused much soul searching in France and Japan, where the nuclear industry was mortified at being beaten so comprehensively by what they would see as their technological inferiors. The design South Korea offered is based on a US one, the Combustion Engineering System 80+, which was given safety approval in the US in 1997, but which would now require significant upgrades to be licensable in Europe and the US. Work has yet to start in the UAE and it remains to be seen whether South Korea’s bid was realistic, or whether it was seriously under-priced, failing to taking into account the issues of building away from home soil. If things go wrong, Korea’s entry to the nuclear export market could be short-lived…. Source: Platts - a leading global provider of energy, metals and petrochemicals information.

February 26, 2012 Posted by Christina MacPherson | economics, Rosatom | Leave a Comment